Zacks Equity Research has named Flagstar as its bull of the day, saying that as a group, mortgage lenders and local banks might be worth looking at by
“The housing market remains resilient and has been a bright spot in an otherwise drab economic backdrop,” Zacks said, adding that while homebuilder stocks are trading at high valuations, Flagstar and similar entities are “relatively inexpensive on a valuation basis and have seen their share prices cut by over a third.
“The nice thing about the mortgage play is that you don’t have to worry if customers are buying new or old homes or what the cost of lumber or land is. They simply profit from the transaction, no matter who’s buying; as long as the buyer secures a mortgage of course.”
Zacks pointed out that Flagstar not only is a survivor (albeit one “with a few bumps and bruises”), it remains a strong player in the mortgage space. According to the Quarterly Data Report, Flagstar ended 4Q12 as the nation’s second largest wholesale originator, seventh largest in total origination volume and the 14th largest mortgage servicer.
